If you are considering solar power for your home you’ve likely done some research and learned that depending on the size of your system, you could be spending a lot of money on initial installation costs and registration fees. Solar is a great investment in the long run and if you are looking at solar for other reasons (energy independence) the initial cost begins to pay for itself quickly. However, if you don’t have the means to pay for these installation costs out of pocket, what should you do? Fortunately, there are various financial institutions that offer solar loans.
What Are Solar Loans?
Solar loans are similar to traditional loans that you may apply for when you want to buy a car or have any other major renovation work done on your home. You will have to explain the purpose of the loan and how you want to spend the money. There are many different financial institutions that provide solar loans, but they are not all the same. They vary in terms of terms and conditions as well as interest rates depending on where you live and your personal financial situation and credit history.
If you are doing other major improvements to your home in addition to solar, you can wrap these together into one loan. If you go a more traditional route and get a loan through a bank or credit union, you’ll likely have less trouble justifying the purpose of the loan to them. If you go with a lender that specializes in solar loans, keep in mind that they may limit how much of the loan can go towards other home improvement projects.
What Are the Benefits of a Solar Loan?
There are many benefits to solar loans. For example, the interest rates are generally lower than the interest rates of a traditional home renovation or improvement loans. A solar loan is a little different because it is considered to be more like an investment than a loan.
A solar-specific loan also means it's coming from an institution that specializes in solar, which is something you should consider as you choose your lender. These institutions have a much better understanding of the solar industry and the costs associated with getting a system in your area. They will also have a better understanding of how to calculate your return on investment and all of the tax incentives you should look into to offset your costs. Furthermore, lenders specializing in solar will work with installers directly and make the whole funding process run much more smoothly. There are even institutions that can offer discounts on materials like panels that a traditional lender can’t.
Like any other loan, applying for a solar loan requires you to provide information about your income, financial standing, credit history, as well as proof of ownership of your home. Many solar lenders offer pre-qualification applications that you can fill out. This will help you get a better estimate as to how much of a loan you are eligible for and if you can afford the monthly payments.
Many times, your installer will ask you to fill these out with their preferred lender to make sure they set clear expectations for the scope of your project with you upfront.
Even though solar power systems can be extremely expensive, with a solar loan, you can pay for it throughout the year. You can cover the costs of the installation and see how much of the monthly payments you can afford to pay.
Is a Solar Loan Worth It?
Although solar power systems are expensive, they are worth the investment in the long term. Once you have invested in a solar power system and have it installed, you will have free and renewable energy without much in the way of maintenance costs. Solar loans are worth it if you want to make an investment in solar power today to achieve those benefits in the future. Right off of the bat, you’ll start paying that loan back with your reduced monthly energy bill and in some cases, may receive dividends from your local power provider if you are able to push excess energy generated from your system back into the grid. In the end, you will be free from electricity costs and will not have to rely on traditional energy sources.
Conclusion
Investing in solar power is a great way to support the environment and improve your energy independence, as well as save money on your monthly expenses. Solar loans are a great way to pay for solar panels today to get your system up and running.
If you need financing for solar panels, you can contact EnFin. We are a trusted lender that specializes in financing residential solar systems. Get in touch with us to learn more about your options.
